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Google's earnings may move stock closer to $500 level
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Google's stock continued to rally higher on July 15th, 2009. The search engine giant is set to report its 2nd quarter earnings tomorrow after the market close. Everyone knows they usually generate enormous cash flows, but in this current climate it can be tough.
Investors are bullish on Google's stock as it has rose over 10% in the past couple of weeks to near $440 a share. 
Analysts are expecting Google to report $5.06 a share in earnings on over $4 billion in revenue excluding traffic acquisition costs. Citi is reiterating a buy recommendation with a price target of $580 per share.
Benchmark's Clayton Moran is less optimistic and believes advertising has not bottomed and will continue to be slow during the summer. Microsoft's Bing search engine rose from 8% market share to 8.4% in the month of June while Google maintained its market share of 65%. It is actually the only search engine that gained market share last month. Earnings are expected to be good, but competition is heating up so it's hard to tell if Google's stock is a good investment.
Using technical analysis it is easier to make a buy or sell recommendation on Google's stock. Goog recently broke out of an ascending triangle on a 1 year weekly chart. The price target of the pattern suggests Goog will move up to $472 per share in the near term. There is some heavy resistance around the $480-$500 level, so Goog will most likely pause around this level.
The price target of $472 per share represents an 8% gain over today's close. Keep in mind a breakout of an ascending triangle on a weekly chart may take a while to reach its target. If the stock breaks down from these highs, it has to hold the $375 area otherwise the ascending triangle pattern will fail. Buying a stock prior to earnings is risky, but a potential 8% gain sure looks attractive.
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